Study: Companies cut, employees pay the price

Cost-cutting remains a top priority for about half of U.S. businesses, and their employees pay the biggest price, a recent study says.

Last year, about one-third of businesses eliminated or delayed raises, while about a quarter cut benefits and reduced hours for full-time workers, mostly in the name of the bottom line, says Aflac’s Workforces Report, now in its fourth year.

Those cuts have made it especially difficult for employees to be prepared for emergencies, with about half of the 5,209 workers surveyed saying they had $1,000 or less saved up, or they would have to borrow from a retirement account or use a credit card to pay out-of-pocket costs, says the study, which was released Thursday.

“These shifts that employers are making are already worsening precarious financial situations for a lot of employees who haven’t really recovered from sort of a progressive recession,” said Matthew Owenby, vice president of human resources at Aflac.

Aflac began the study in 2010 after the enactment of the Affordable Care Act, otherwise known as ObamaCare, to learn more about how it would affect employer decisions on benefits and compensation.

Suzanne Zoumaras, a senior vice president at Entropic who teaches compensation and benefits at San Diego State University, said the results of Aflac’s study seem to support the need for their product.

“Most organizations have since 2010 had salary adjustments and not delayed,” she said. “You can reflect back to the economic downturn and say yes, this might have been true but since 2010, and especially in 2014, as the market has accelerated and the unemployment rate has gone down companies can no longer afford not to give salary adjustments.”

Zoumaras said Aflac’s study did accurately report that health insurance costs are a top concern of companies. Since 2003, employer-sponsored health care premiums have increased 80 percent, the Kaiser Family Foundation reported in August. In the same time frame, wages rose 31 percent.

The Aflac study said a lot of the cuts are coming in the form of reduced benefits, as noted from the 1,856 businesses who participated in the study.

In 2010, the first year of the survey, about 35 percent of the companies increased their workers’ co-pays and premiums. That declined to 25 percent in 2012, only to rise to 28 percent in 2013. About 30 percent increased premiums and co-pays this year. At the same time, a lower percentage of companies introduced high-deductible health plans, reduced options, and eliminated family coverage.

Aflac, a supplemental-insurance provider based in Columbus, Ga., commissioned Research Now to conduct the study.